|
State Sen. Sue Rezin, R-Morris, said the $4 million estate tax
threshold is hurting farm families who want to pass farms on to
the next generation.
“Farmers’ money is tied up in land. They are not cash rich. They
are land rich,” Rezin said.
Under the present tax law, the gross value of a farm must be
under $4 million for it to qualify for the inheritance tax
exemption. The Farm Family Preservation Act, sponsored in the
state Senate by Sen. Dave Koehler, D-Peoria, and an identical
bill in the House that is sponsored by state Rep. Sharon Chung,
D-Bloomington, would raise the threshold to $6 million.
In a recent paper, economist Gary Schnitkey gave the example of
325 acres of farmland that generates $25,000 a year in income.
If the farmer dies, the tax liability would be $250,000.
Inflation has pushed the value of farmland out of proportion to
the income that the farm generates.
The inheritance tax has been a huge issue for smaller farmers
who want to continue to farm but cannot afford the inheritance
tax, Rezin said.
If someone in their family passes away, the children who inherit
the farm will be taxed on a farm that is valued at $5 million.
“It is forcing families to sell the family farm,” she said.
At the roundtables Rezin holds in her district, constituents
have complained for years about Illinois’ low inheritance tax
threshold. This year she is hopeful that legislators can finally
get something done to raise it.
“We have to explain to our colleagues in Chicago why it is
incredibly important to raise the threshold so that farmers who
are not cash-rich are able to afford the inheritance tax,” she
said.
Rezin said that momentum is finally on the side of change. She
commends Koehler and Chung for building a bipartisan coalition
of support for their bills.
State Rep. Charlie Meier, R-Okawville, said the goal of the
Family Farm Preservation Act is to give future generations the
ability to keep farming.
"That's not farmland to us, that's a member of our family. That
member of our family has taken care of our family for
generations,” Meier said.
Under the terms of the proposed legislation, the farm must make
up at least 50% of the gross estate. The family must have farmed
the land for five of the previous eight years before the farm
owner’s death. Survivors must continue to farm the land for 10
years after the death.
|
|
